Business income
Only income for the business should be included in the business financial statement. Personal income, such as benefit income or employed income, is covered in the personal financial statement. Unless the client’s business is seasonal, you usually need details of the income received by the business during the last three months. This should be based on actual payments received by the business (not on invoices issued by the business). The income figure should not include an amount due for work the business has completed unless payment for the work has been received.
If the client’s business is seasonal, a longer analysis of business income may be needed (up to a maximum of the last 12 months). You must explore how a client’s business usually fluctuates to decide what period the business financial statement should cover. Specialist advice may be needed.
Advisers should also check whether the self-employed client’s business has received any Covid-related government payments, such as bounce-back loans, to cover business income reductions caused by the pandemic.
This type of payment will need to be listed, but you should be aware that any one-off payments could distort what the financial statement shows as available to the client. Specialist advice is usually needed in this situation.